Ind. reverses plan to halt some jobless benefits

The state had earlier announced extended federal unemployment benefits would be suspended on Saturday because of the sequester.

Indiana has reversed a decision to suspend extended federal unemployment benefits as of Saturday due to the federal budget impasse.(Photo: Jacob Kriese, The Indianapolis Star)

Story Highlights

Earlier announcement of suspended benefits created uproar

State officials had cited uncertainty over looming federal budget cuts

Reversal comes after talks with U.S. Labor Department

INDIANAPOLIS -- Following a torrent of criticism, Indiana on Wednesday reversed its decision to suspend extended federal unemployment benefits for some 32,000 jobless Hoosiers.

The state Department of Workforce Development quietly posted a notice on its website Saturday telling out-of-work Indiana residents they'd be out of a check, due to federal budget cuts from the sequestration that Congress and the White House have been unable to avoid so far.

Indiana was the only state to take that step.

But late Wednesday, Commissioner Scott Sanders announced that the decision had been reversed. He said he had been assured that "unemployment benefits will not be impacted by sequestration through the week ending March 9… the Indiana Department of Workforce Development will proceed with full payment of extended unemployment compensation until further notice."

The turnabout came after harsh criticism earlier Wednesday from national and state labor groups. The U.S. Department of Labor also weighed in after learning the state had told people their checks would be stopped. The federal agency called the state and urged it to re-evaluate its decision.

"We have reached out to the state and our understanding is that they are reassessing their guidance based on the conversation," a Labor Department spokesman said. "I think it's simply that there was a misunderstanding of exactly when changes to the benefit payments would happen, and we helped clarify that for them."

However, even after that discussion, the state kept the notice up for hours warning jobless residents that the checks would stop as of Saturday. And state officials insisted to reporters that they still needed more "guidance" from the federal government on what to do if the federal budget cuts mandated in what's known as "the sequester" was not averted.

Indiana Gov. Mike Pence made no mention of it at a half-hour news conference he held Wednesday morning before the criticism erupted. His office later released a statement, saying, "Gov. Pence appreciated the efforts by the Indiana Department of Workforce Development to inform Hoosiers that sequestration could temporarily interrupt their unemployment benefits if further guidance was not provided by the federal government.

"The governor is also grateful that, as a result of DWD's persistence, the U.S. Department of Labor has now provided sufficient guidance to allow unemployment benefits to continue for thousands of Hoosiers struggling in this economy," wrote Christy Denault, Pence's communications director.

News that the state had backed off was welcomed by Nancy Guyott, president of the Indiana AFL-CIO, who had called the state's initial decision outrageous and possibly illegal. But, she said, Indiana had unnecessarily alarmed residents who are struggling to make ends meet.

"I'm sorry for the trauma and worry I know the impacted workers were having," Guyott said.

Those include people Sherri Summitt, a 48-year-old Unionville woman who has been unemployed since last May.

She has returned to school to try to boost her chances of landing a job, and is supporting herself and children with the help of a $368 unemployment check from the federal government. State benefits help people up until they have been unemployed for a half-year. From 27 to 63 weeks, the federal government gives extended benefits to the jobless. In Indiana, about 32,000 residents receive an average of $275 a week under the program.

When she saw the state's notice that it was suspending her benefits, Summit was upset – but not, she added, shocked.

"To me it was just typical Indiana, same-old, same-old," Summitt said, describing the delays she experienced getting benefits in the first place.

Noting that other states hadn't alarmed their residents, Summitt said: "What is wrong with Indiana? Seriously. What is wrong with Indiana?"

Joseph Frank, a spokesman for the state Department of Workforce Development, blamed it on the federal government.

"We have known about sequestration for over a year, " Frank said. "And they're just now talking to us about it?"

The state decided to tell people their checks would be suspended, he said, to give people "certainty."

"If we pay folks out too much, more than they should have got, they have to pay us back," Frank said. "This is a congressional issue at this point. If it becomes a bargaining chip, to where federally extended benefits are just ended, these people have to pay back the entire amount to us."

Maurice Emsellem, a policy co-director of the National Employment Law Project, criticized the state's handling of the matter.

"The state can sugar coat it all they want," he said. "But it's now clear they made the wrong call to suspend benefits to unemployed Hoosiers hardest hit by the recession."

He said the sequestration, if it is not averted, will require 2 million unemployed workers nationwide to absorb an 11 percent cut in benefits, most likely starting in April.

Most states, he said, are preparing to trim unemployment checks by a total of $400 per recipient over the course of the federal fiscal year, which ends in September, to cover the lost funds. For most workers, Emsellem said, the smaller checks will begin in April. That means a 10 percent to 11 percent reduction in each check, he said.

"The idea that you can just suspend the check is" just wrong, he said.